Ellen J. ShemitzChapter 2: Economic Security

 

2.1 Children in Poverty

 

Definition

Children in poverty are the number and percentage of children living in families whose annual income is below the official federal "poverty threshold."

 

Findings

Child poverty in New Hampshire is on the rise. From 1986 to 1996, child poverty grew by 25% in the state, as shown in Figure 2-1.[1]   By 1996, the most recent year for which reliable data are available, approximately 30,000 children—10.2% of our child population—were living in poverty.[2]

 

Figure 2-1

 

Figure 2-1 above undercounts the number of poor children in the state.  The graph is based on the federal poverty threshold, which understates the real need of children and families based on the cost of living in New Hampshire. The NH Department of Health and Human Services publishes an annual Standard of Need that attempts to measure the true costs of raising children in New Hampshire is taken into account.[3]  Table 2-1 compares the Census poverty threshold and the state's Standard of Need:

 

Table 2-1

Size of Family Unit

1998 Census Bureau Preliminary Poverty Threshold

1999 NH H&HS Standard of Need

NH Standard of Need as % of Poverty Guidelines

1

$8,310

$14,100

170%

2

$10,973

$18,480

168%

3

$13,001

$22,992

177%

4

$16,655

$27,108

163%

5

$19,682

$31,032

158%

6

$22,227

$36,336

163%

7

$25,188

$40,452

161%

8

$28,023

$46,536

166%

 

The table shows that a family would need an income of about 165% of the federal definition of poverty in order to cover  "the actual costs involved in bringing up a New Hampshire family at a minimum level of adequacy and decency."[4] 

 

How many children, then, are living at levels below minimum adequacy and decency? Unfortunately, the Census Bureau Current Population Survey does not collect information that allows for an actual estimate to be made.  We do know the number would be significantly higher than the current estimate of 30,000.

 

We also know that the poor children living in our state are not equally distributed across our towns and cities.  Although the limitations of the Current Population Survey (CPS) do not allow an update of the 1996 Kids Count report on poverty by economic cluster, data on per capita income (PCI) provides insight into the relative economic well being of communities.

 

From 1989 to 1996, per capital income rose by $3,698—an increase of 18.8% from $15,959 to $19,657. The increase varied significantly among the different economic clusters in the state, as shown in the Figure 2-2.[5]

Figure 2-2

 

Significance

The 25% increase in child poverty in New Hampshire starkly contrasts with a national decrease of 5% over the same time period. [6]  Far too many children in New Hampshire are poor or extremely poor, and the trend is moving in the wrong direction.

 

Poverty poses a grave threat to child health and well being.  Children growing up in poverty, especially extreme poverty, are far more likely to experience health and developmental problems, which influence their school readiness, social skills and, later, their employment potential.[7] 

 

Child poverty poses a threat not only to the child, but also to the greater community.  Poor children are one-third less likely to attend a two- or a four- year college than non-poor children and are half as likely to earn a bachelor’s degree.[8]  These children face a lifetime of lower wages and earning capacity.  Today’s children are tomorrow’s leaders and workers. When we invest in our children, we invest in our state’s economic future.

 

Ending child poverty should be one of the highest priorities of local, state, and federal government and of the private sector.  A successful agenda to end child poverty should include tools to enable families to achieve economic self-sufficiency, such as fair wages, education, and job training as well as measures to ensure an adequate safety net for families.  The Children's Agenda 2000 calls for a number of concrete action steps in this area, including:

 

Ø       Raising the minimum wage in New Hampshire;

Ø       Creating rental assistance support programs in the state;

Ø       Expanding unemployment insurance to cover part-time workers;

Ø       Allowing TANF funds to be spent on post-secondary education so that low-income parents have an opportunity to obtain better paying jobs with health insurance.

 

A focus on child care -- particularly for low-income families -- is also critical.  Low-income families spend an average of 25% of their earnings on child care in contrast to average-income families that spend an average of 18%.[9] Many families cannot access quality, affordable child care -- a problem that continues to grow with our low unemployment rate. For many working parents, it is having high quality child care that dictates their ability to work.  Indeed, in New Hampshire last year, businesses are estimated to have lost up to $24 million due to child care related absenteeism.[10] 

 

The sheer number of children in child care demands attention.  In 1997, 44% of NH children age 16 or younger (121,317 children) were in child care during the school year, and nearly three-fifths of preschool children (55,424 preschool children) were in child care.[11] Given the impact of a child's daily environment on cognitive capacity, we need to ensure that all children have access to care appropriate to their ages and developmental levels.

 

Bullets for this Section

·         Child poverty in New Hampshire has increased by 25% over the last decade, in contrast to a 5% decline nationwide.[12]

·         The number of children living with parents lacking full-time, year-round employment has increased by 15% over the last decade, in contrast to an 11% decline nationwide.[13]

·         PCI varies by approximately $10,000 or 67% from the wealthiest to the poorest economic cluster in the state.

 

 

 

 

2.2 Unemployment and Wages

 

Definition

The unemployment rate is the number of individuals who are unemployed and actively seeking employment divided by the total number of individuals in the labor force. 

 

The "unemployment equivalent index" measures the impact of low wages upon community earnings by converting low wages to a rate of unemployment. The unemployment equivalent index is defined as the number of jobs that would pay zero wages in order for a Labor Market Area with wages below the state average to have the remainder of the jobs pay the average annual wage.

 

Findings

In late 1999, New Hampshire enjoyed near record low unemployment, as measured by the unemployment rate. Most adults actively seeking a job were able to find one. Figure 2-3 displays the unemployment rate in New Hampshire for each month since January 1969.

Figure 2-3

 

 

Unemployment rates, however, only measure the opportunity for employment.  The unemployment rate does not identify whether the wages paid by the employment at hand are adequate to raise a family.  The "unemployment equivalent index" presented below provides a measure of the impact of low wages on a community.

 

Analysis of the unemployment equivalent index begins with data from the 1996 Kids Count New Hampshire Book.  In that book, we presented data on the prevailing wages in the eighteen labor market areas of the state using data from 1994.  The figure below updates that data to 1997.[14]

 

Figure 2-4

 

 

The average annual wage of a job in New Hampshire grew from $25,556 in 1994 to $29,291 in 1997, an increase of 14.6%. Over the same period, the consumer price index increased 8.3%. On average, wages in New Hampshire rose more rapidly than the cost of living.

However, the wage structure in New Hampshire still shows considerable difference from region to region, in particular from north to south. Average annual wages increased by nearly $4,000 in the Nashua and Salem/Derry labor markets, but by $2,000 or less in the labor markets of the North Country. Berlin, for example saw average annual wages rise only 7.5%, less than the increase in the consumer price index, while the Salem/Derry area saw wages increase an average of 18.5%, more than double the consumer price index.

 

These variations in average annual wage increases create tremendous differences in opportunity across the state.  In 1994 the average job in Conway paid $12,227 less than the average job in the Nashua Labor Market Area. By 1997, while both experienced higher wages, the gap had grown to $14,584.

 

The low wage structure in some parts of the state has an impact on economic well being, which is analogous to an elevated unemployment rate.  Whereas unemployment represents an acute income problem for a small percentage of the labor force, a low wage structure affects a larger number of people with a chronic income problem.  They may have jobs, but those jobs do not pay enough to meet normal expenses in a given year. 

 

The "unemployment equivalent index" presented here seeks to identify the level of unemployment that would represent the same aggregate economy as the wages missing through a low wage structure. The results for each Labor Market Area are displayed in Table 2-2.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 2-2

 

Unemployment Equivalent Index By Labor Market Area as Derived from Wage Deficiencies, 1997

Labor Market Areas

Excess (Deficiency) in Wages Compared to NH State Average

Unemployment Equivalent Index

Seabrook-S Hampton (Boston MA)

$28,227,119

N/A

Nashua

$452,309,014

N/A

Lebanon

$40,517,382

N/A

Manchester

$127,725,107

N/A

Portsmouth-Rochester

$19,106,690

N/A

New Hampshire Total

$0

0%

Concord

-$82,510,321

5%

Salem-Derry (Lawrence MA)

-$69,225,541

6%

Peterborough

-$21,366,470

7%

Keene

-$101,238,333

15%

Claremont

-$83,086,458

20%

Berlin

-$35,708,035

21%

Laconia

-$115,028,613

21%

Lancaster

-$18,806,593

28%

Littleton

-$72,658,200

32%

Plymouth

-$84,081,248

33%

Pelham (Lowell MA)

-$12,925,259

34%

Conway

-$163,517,752

48%

Colebrook

-$22,332,017

54%

 

 

Significance

Our "unemployment equivalent index" may be best explained by example. If the total wages paid in the Claremont Labor Market Area in 1997 were the same as the average state wages instead of the prevailing lower wages in Claremont, there would be 20.2% fewer jobs. Assuming that each member of the labor force has only one job, this would add 20.2% to the unemployment rate in Claremont.[15]  Certainly, the "pain" would have been spread among families in the community differently if there had actually been a 20% unemployment rate, but the effect of low wages on aggregate earnings of everyone in a community can be represented by this unemployment equivalent index.

 

The high unemployment equivalent rates in some communities translate into decreased economic security for many children.  Given the high correlation between low income and poor child outcomes, communities in the Labor Market Areas with high unemployment equivalencies need to address the issues of: jobs that pay wages capable of supporting a family; the accessibility and affordability of education; and the accessibility and affordability of training to enable workers to qualify for higher paying, skilled jobs. 

 

 

Bullets

 

·         Wages in New Hampshire have increased more rapidly than the cost of living, on average.  Regional variations, however, create tremendous differences in the wage structure across the state.

·         It takes three average jobs in Conway to earn the same income as two average jobs in Nashua.

 

 

 

2.3  Births to Mothers Who Have Not Completed High School

 

Definition

Births to mothers who have not completed high school are counted at the time of childbirth. This includes older mothers who dropped out of school before graduation and younger mothers still enrolled in school. Rates are calculated for every 1,000 live births.

 

Findings

Births among women who have not graduated from high school have been declining consistently over the past two decades, from a state average of 145.7 per thousand in 1973 to 78.1 per thousand in 1997.  On average, births to mothers without a high school diploma have declined 46% in the past 24 years.

 

The decline has occurred in each economic cluster, but on a percentage basis it has been greatest in the wealthiest communities, as shown below.


 Figure 2-5

 

 


From 1980 to 1997, the difference in rates between clusters has grown significantly.[16]   In 1980, the rate in the poorest communities was about three times that in the wealthiest communities.  In 1997, after 17 years of decline, it was four times as great in the poorest communities as in the wealthiest.

 

Figure 2-6

 

Significance

A child born to a mother who has not completed high school is at risk both educationally and economically.

 

Studies show a correlation between a mother's level of education and a child's pace of learning, a child's ability to read, a child's school readiness, and a child's likelihood of becoming a school dropout.[17] 

 

So too, studies show a correlation between a mother's high school completion and the economic well being of children.  According to the U.S. Census Bureau, recent high school dropouts in 1997 earned an average $15,000 annually, compared with $22,000 for a high school graduate and $38,000 for a college graduate.[18]  Support for mothers to help them attain -- at minimum -- their high school diplomas translates into parent support that gives mothers the tools they need to provide a safe, stimulating environment for their children.

 

 

 

2.4. Children Receiving Public Assistance

 

Definition

Children receiving public assistance are the number and percentage of children for whom the state provides support in the form of food stamps and/or Medicaid, and cash grants (known as Aid to Families with Dependent Children or AFDC until August 1999, when it changed to Temporary Aid to Needy Families or TANF).

 

Findings

The number of cash welfare-dependent children has fallen considerably since October 1995. At that point, 5.1% of New Hampshire children (14,993 children) lived in families receiving cash AFDC grants.[19]  In August 1999, 3.1% of our children (9,375 children) were reported to be living in families receiving TANF.[20] This represents a decline of 37.5% in 46 months.

 

The decrease in the number and percentage of children living in families receiving cash aid is due to two factors: the improved New Hampshire economy and the changes in federal/state welfare policies that occurred when the TANF program replaced the AFDC program. While the degree to which either of these factors contributed to the decline cannot be determined, Figure 2-7 shows a falling caseload that began under the AFDC program and continued at approximately the same rate under TANF.

 

The current low number is not without precedent: there were only 3,988 AFDC cases in August 1988, during the boom immediately prior to the last recession. In December 1999, there were 5,536 cases. The current economic boom, unprecedented in its length, together with the welfare reform measures enacted by Congress and the state legislature, have not reduced the basic cash welfare caseload below that of 1988.

 

Figure 2-7 displays the monthly count of AFDC/TANF cases (not children) from April 1967 through December 1999.[21]